4 Reasons Molecular Dx Labs May Not Benefit From New CED Program

by Lâle White

R&D Costs, Lower Fee Schedules Create Catch-22 For Diagnostic Labs

In a recent article, a CMS official stated that the revamped CED program could benefit Molecular Dx reimbursement.Unlike other Medicare services currently subject to CEDs, diagnostic services lack the pricing flexibility to recoup research and development costs. Pharmaceutical providers can incur the substantive cost of a CED and recoup such costs in the reimbursement of the drug. Diagnostic lab services are subject to the clinical lab fee schedule with no provision for R&D. The CED would then provide a lower than fee schedule reimbursement which would likely be below cost, with no ability to recoup any of the cost of the CED itself. Additionally, a CED would define the test as an investigational service which would influence coverage by private Payors. The CED can extend coverage of a service by three or more years, making investment into costly diagnostic assays a poor investment. In addition, given the speed at which diagnostic innovation is moving, it is highly likely that enhancements and improvements would be made during the lifespan of the CED, making the final approved assay potentially obsolete.